Xactly Sales Compensation for Dummies_02_05_2007

51
Mark L. Chambers with Christopher W. Cabrera Find out how to incent right and sell more! A Reference for the Rest of Us! ® Xactly Sales Compensation FREE eTips at dummies.com ® Make your compensation plan a strategic weapon! Compliments of

Transcript of Xactly Sales Compensation for Dummies_02_05_2007

Page 1: Xactly Sales Compensation for Dummies_02_05_2007

Too many companies still use spreadsheets to keep track of their sales compensation. In this book, you can find out why you need more than a spreadsheet to compensate your sales force properly. A dedicated sales compensation application can drive the right behavior among your sales representatives, resulting in increased performance and profitability.

This guide walks you through the business and technical aspects of evaluating various sales compensation management solutions and transitioning your company’s plan to take full advantage of the latest technologies for today’s mobile sales force.

ISBN: 0-470-04598-1

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Mark L. Chamberswith Christopher W. Cabrera

Find out how to incent right and sell more!

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Say goodbye to spreadsheets— start managing your sales compensation plan

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Praise for Xactly Sales Compensation

For Dummies “Sales management needs to be informed buyers of advanced

automation tools to successfully manage sales compensation plans.

‘Xactly Sales Compensation For Dummies’ contributes to this

knowledge.” — David J. Cichelli, author of “Compensating the Sales Force”

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a leading sales consulting firmFREE eTips at dummies.com®

Improve your spreadsheet-based compensation plans with an online solution

Improve your plan with SPIFs, bonuses, and rules-based automation

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a strategic weapon!Compliments of

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About Xactly™ CorporationIt’s a company’s mission and personnel that deliver success, and Xactly Corporation, the leading on-demand sales compensation management company, has both a clear mission and the best talent on board!

Xactly has a world-class management team. For example, Xactly’s founder, president, and CEO, Christopher W. Cabrera , has almost two decades of senior management experience. Previously senior vice president of operations for Callidus Software, a leading provider of enterprise incentive compensation management systems, he was responsible for worldwide sales and marketing strategies that contributed to the company’s growth of annual revenues from zero to greater than $75 million. You can understand why Chris can predict the sales incentive challenges of companies both large and small.

At Xactly, the motto is a simple one: “Incent right. Sell more.™” Motivating your sales force with a superior compensation plan is the driving force behind the design of Xactly Incent™. And it’s not just the software, but the support offered by Xactly throughout your company’s implementation of Xactly Incent. We offer this For Dummies book to help you learn more about successfully managing sales compensation and about the Xactly Incent sales compensation management application. For more info about our training, consulting, and implementation offerings check out our Web site:

www.xactlycorp.com

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by Mark L. Chamberswith Christopher W. Cabrera

Xactly™ SalesCompensation

FOR

DUMmIES‰

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Xactly™ Sales Compensation For Dummies®

Published byWiley Publishing, Inc.111 River StreetHoboken, NJ 07030-5774www.wiley.com

Copyright © 2006 by Wiley Publishing, Inc., Indianapolis, Indiana

No part of this publication may be reproduced, stored in a retrieval system or transmitted in anyform or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise,except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, withoutthe prior written permission of the Publisher. Requests to the Publisher for permission should beaddressed to the Legal Department, Wiley Publishing, Inc., 10475 Crosspoint Blvd., Indianapolis, IN46256, (317) 572-3447, fax (317) 572-4355, or online at http://www.wiley.com/go/permissions.

Trademarks: Wiley, the Wiley Publishing logo, For Dummies, the Dummies Man logo, A Referencefor the Rest of Us!, The Dummies Way, Dummies Daily, The Fun and Easy Way, Dummies.com, andrelated trade dress are trademarks or registered trademarks of John Wiley & Sons, Inc. and/or itsaffiliates in the United States and other countries, and may not be used without written permission.Xactly Corporation, “Incent right. Sell more.”, Xactly Incent, and Incentive Estimator are trademarksof Xactly Corporation. All other trademarks are the property of their respective owners. WileyPublishing, Inc., is not associated with any product or vendor mentioned in this book.

LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: THE PUBLISHER AND THE AUTHOR MAKENO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETE-NESS OF THE CONTENTS OF THIS WORK AND SPECIFICALLY DISCLAIM ALL WARRANTIES,INCLUDING WITHOUT LIMITATION WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE.NO WARRANTY MAY BE CREATED OR EXTENDED BY SALES OR PROMOTIONAL MATERIALS.THE ADVICE AND STRATEGIES CONTAINED HEREIN MAY NOT BE SUITABLE FOR EVERY SITU-ATION. THIS WORK IS SOLD WITH THE UNDERSTANDING THAT THE PUBLISHER IS NOTENGAGED IN RENDERING LEGAL, ACCOUNTING, OR OTHER PROFESSIONAL SERVICES. IF PRO-FESSIONAL ASSISTANCE IS REQUIRED, THE SERVICES OF A COMPETENT PROFESSIONALPERSON SHOULD BE SOUGHT. NEITHER THE PUBLISHER NOR THE AUTHOR SHALL BE LIABLEFOR DAMAGES ARISING HEREFROM. THE FACT THAT AN ORGANIZATION OR WEBSITE ISREFERRED TO IN THIS WORK AS A CITATION AND/OR A POTENTIAL SOURCE OF FURTHERINFORMATION DOES NOT MEAN THAT THE AUTHOR OR THE PUBLISHER ENDORSES THEINFORMATION THE ORGANIZATION OR WEBSITE MAY PROVIDE OR RECOMMENDATIONS ITMAY MAKE. FURTHER, READERS SHOULD BE AWARE THAT INTERNET WEBSITES LISTED INTHIS WORK MAY HAVE CHANGED OR DISAPPEARED BETWEEN WHEN THIS WORK WAS WRIT-TEN AND WHEN IT IS READ.

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Publisher’s AcknowledgmentsWe’re proud of this book; please send us your comments through our online registra-tion form located at www.dummies.com/register/. For details about how to create aFor Dummies book for your company or organization, please contact dummiesrights&[email protected].

Some of the people who helped bring this book to market include the following:

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About the AuthorsChristopher W. Cabrera is founder, president, and chief exec-utive officer of Xactly Corporation. He has over 20 years ofsuccessful senior management experience at both early-stageand public companies where he has managed sales, market-ing, operations, and business development. Most recently,Chris was the senior vice president of operations for CallidusSoftware, a leading provider of enterprise incentive compen-sation management systems to global companies. At Callidushe was responsible for the execution of worldwide sales andmarketing strategies, customer advocacy, and strategic allianceswith companies such as IBM, Accenture, and Deloitte. Priorto joining Callidus Software, Chris held senior managementpositions at Silicon Graphics, a Unix hardware and softwarevendor, where he was responsible for annual sales over $500million. Chris earned a BS in business administration with anemphasis in entrepreneurship from the University of SouthernCalifornia and a master’s degree in business administrationfrom Santa Clara University.

Mark L. Chambers (Columbia, Missouri) has been an author,computer consultant, BBS sysop, programmer, and hardwaretechnician for more than 20 years. Mark has written over15 computer books. His recent titles include Mac OS X PantherAll-in-One Desk Reference For Dummies, PCs All-in-One DeskReference For Dummies, 2nd Edition, CD & DVD Recording ForDummies, 2nd Edition, Building a PC For Dummies, 4th Edition,and Scanners For Dummies, 2nd Edition. Mark is currently afull-time author and tech editor. Mark holds degrees in jour-nalism and creative writing from Louisiana State University.

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Contents at a GlanceIntroduction .....................................................1

Part I: The Sales Compensation Challenge ..........3

Part II: Understanding the Delivery Models ......13

Part III: Using Xactly Incent to Manage Real-World Compensation ...............................21

Part IV: Focusing on Xactly Incent...................29

Part V: Top Ten Advantages to Choosing Xactly Incent ...............................39

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Introduction

Sales compensation has become more sophisticated andcritical to a company’s success in recent years, and with

the ever-increasing complexities of compensation plans, com-panies need a dedicated software solution to automate theprocess. Perhaps you’ve already started looking beyond yourold-fashioned spreadsheet solution and are already bewilderedby the array of sales compensation and customer relationshipmanagement options: enterprise, business process outsourc-ing, application service provider, on-demand — how do youknow which way to go? This book is designed to help you cutthrough the confusing hype and understand the advantagesand disadvantages of an array of current sales compensationmanagement approaches so that you can make a moreinformed decision about how to choose a solution for yourcompany’s sales compensation program.

Later chapters of this book introduce you to an on-demandcompensation solution from Xactly Corporation: XactlyIncent. You discover more about why the on-demand deliverymethod is becoming such a popular solution for compensa-tion management among companies of all sizes.

About This BookThis book describes several sales compensation managementsoftware options from both business and technical perspec-tives. Each part of this book leads you through a differentstage of seeking a solution to common sales compensationchallenges. You may want to read the book cover to cover togain a fuller understanding of sales compensation manage-ment, or you may prefer to skip around to find what you needwhen you need it. The book is arranged in five parts:

Part I: The Sales Compensation Challenge encourages youto take a look at the big picture of sales compensation andanswer the question: Is your compensation plan really drivingprofits? If you’ve been relying on a spreadsheet system, start

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Xactly Sales Compensation For Dummies 2here for some eye-opening surprises about how dedicatedsales compensation software can increase top and bottomline revenues.

Part II: Understanding the Delivery Models provides asound survey of what various delivery models currentlyavailable can do for your company’s sales compensationplan management.

Part III: Using Xactly Incent to Manage Real-WorldCompensation describes some real-world scenarios andhow Xactly Incent can address common concerns aboutsales compensation management solutions.

Part IV: Focusing on Xactly Incent goes into more detailabout how Xactly Incent works and what it offers as a solu-tion to your sales compensation dilemmas.

Part V: Top Ten Advantages to Choosing Xactly Incent givesyou a quick rundown of ten very good reasons to considerXactly Incent as your sales compensation solution. If you’resitting on the fence or want to help someone else who’s notsure which way to go, start here!

Icons Used in This BookThroughout this book, I occasionally use icons to call atten-tion to material worth noting in a special way. Here is a list ofthe icons along with a description of each:

Some points bear remembering. When you see this icon, takespecial note of what you’re about to read.

This icon indicates technical information that is probablymost interesting to IT professionals.

This icon directs you to information that can help you dosomething more efficiently and save costs.

This icon tells you when you need to be careful.

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Part I

The Sales CompensationChallenge

In This Part� Asking the Compensation Question

� Looking past an Excel spreadsheet

� Adding up the advantages of proper compensation

� Considering the visibility of your compensation data

Sales compensation is one of those clever strategies com-panies rely on to boost sales. Execs and analysts spend

hours tweaking the numbers, deciding who gets what bonus,incentive, percent increase, or special parking spot for this orthat above and beyond sales performance . . . and it can getpretty complicated fast. Then it’s up to someone, usuallymany layers of someones to manage the plan and make sure itworks: Tracking the numbers becomes a logistical nightmare.

In this part, I start with some rather radical news: a discus-sion of the limitations of the typical spreadsheet-based salescompensation system. If you’re relying on a spreadsheet orin-house system to track your compensation data, this mayhelp you wake up from the nightmare and look around foralternative solutions.

Fortunately, I have good news as well! New tools in the form ofsales compensation management applications address manyof the traditional spreadsheet headaches. You can discoverhow different people in your company can benefit from a comprehensive sales compensation plan — not just your sales force and compensation analysts, but your company’s

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Xactly Sales Compensation For Dummies 4executives as well. I also introduce you to the importance ofcompensation visibility, one of the keys to keeping your salesrepresentatives at their peak potential.

Does Your Sales CompensationPlan Maximize Profits?

The first question you want to ask regarding any sales com-pensation plan is whether it’s doing what you think it’s doing:improving sales. I call it the Compensation Question, and it’sextremely important to every company with an interest insales, no matter how many sales representatives you have onyour team. Ask yourself:

Is your company’s compensation program maximizing profits,or is it falling short?

To be more specific, when you consider “maximizing profits,”you want to be sure that your current compensation program:

� provides your sales representatives with a clear andtimely method of tracking their performance.

� helps your sales force hit your sales objectives.

� enables you to quickly customize your compensationprogram to keep pace with changes in the marketplace.

Seems like common sense, right? Yet you’d be surprised atjust how many companies — of all sizes — are falling short inat least one of these areas.

If your company’s compensation plan drives success, fromyour sales force all the way to management, then you willsell more. And that’s the simple truth behind theCompensation Question.

Isn’t Excel Just Dandy?Many companies start out using Microsoft Excel to tracktheir sales compensation programs because, well, becauseit’s there. It’s a handy tool, but sooner or later you may startto wonder whether it’s the right tool for the job.

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Okay, let me be honest: I’ve written entire chapters aboutMicrosoft Excel for several of my PC and Mac books, and it isindeed dandy software! I like Excel. It’s a versatile applica-tion, and it can be an extremely powerful business tool. Thefolks in Redmond can be very proud.

But just because a task involves numeric data, that doesn’tmean that Excel is perfect to the task. For example, when itcomes to managing a compensation plan, any spreadsheet-based solution — including Excel — ranks right up therewith the manual typewriter and the telegraph. It’s outdatedtechnology . . . more trouble than it’s worth.

If you’re currently using Excel as the basis for your com-pany’s compensation plan, I probably don’t have to listwhat’s broken; you’ve likely suffered enough already. But ifyou’re considering Excel as a solution for your company,then consider these shortcomings with a spreadsheet-basedcompensation program:

� Complex and cumbersome. Creating even the mostbasic plan within Excel involves hours of programming,testing, and fine-tuning.

� Limited reporting options. Custom reports are beyondthe reach of most spreadsheet-based compensation pro-grams. Your sales representatives are likely in the darkwhen it comes to timely feedback on how well they’reperforming.

� Hard to update and automate. Be prepared to take careof changes manually. Automation is minimal at best.

� Restricted coverage. Looking to incent at different levelsaccording to the different products or services that yourcompany sells? Good luck, because a simple spreadsheetapplication just can’t provide that sort of flexibility. (I’dhate to maintain that beast of a document!)

Figure 1-1 is a good illustration of an overly-simplified stab atcompensation management using Excel. The data in this docu-ment is hard to read, hard to retrieve, and hard to maintain . . .and that’s the reason Excel misses the mark so completely as acompensation application.

Part I: The Sales Compensation Challenge 5

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Figure 1-1: A typical spreadsheet is far from the best solution for a com-pensation analyst.

Understanding What ProperCompensation Can Do for You

Success and profit may be uppermost in your mind whenevaluating your sales compensation program, but sometimesyou may find it difficult to measure with regard to compensa-tion plans. That’s where a compensation management appli-cation excels over Excel. You get specific answers to yourcompensation questions.

In fact, in this section I go so far as to outline the benefitsof proper compensation for three different positions withinyour company: your compensation analyst, your sales repre-sentatives, and your management executives. (If this appliesto your position, all the better!)

A ticket to personal achievementFirst, let’s consider the compensation analyst — naturally,the person within your company who already wrestles withExcel and your spreadsheet-based compensation plan on aregular basis.

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By moving away from a spreadsheet system, the compensa-tion analyst:

� Saves time and trouble. A commercial compensationapplication doesn’t need to be built from the ground up — and a dedicated application should offer built-inautomation and regular updates, so the headache ofkeeping things current disappears.

� Gains the ability to customize quickly. Interested inmodifying your compensation plan to match yourmarket and your products? Perhaps you’d like to com-pare the effects of possible changes in your plan? Youcan customize your sales incentives on-the-fly, doing inminutes what used to take hours under the shadow ofExcel.

� Adds profitability. With the right compensation plan inplace and immediate feedback available to your salesforce, your company will enjoy increased sales. Insteadof a single compensation plan restricted by a spread-sheet, your plan can be based on factors besides rawsales, including product margin or accounts receivable.

� Avoids regulatory hassle. You probably already knowthe name Sarbanes-Oxley — why spend your time fight-ing Excel to make sure your plan meets federal regula-tions? With a commercial compensation application, youcan rest easy while the application provides therequired auditing.

Of course, the bottom line is about profit; and with a cus-tomized, easily-maintained compensation plan that addressesyour needs, your company sells more. Increased sales lead topersonal success for the compensation analyst!

How does my sales force benefit?Your sales representatives will likely appreciate a move awayfrom a monthly cryptic spreadsheet printout of compensa-tion data, but even more advantages are in store when youescape the boundaries of a spreadsheet-based plan.

For example, consider these benefits for your sales force:

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� Visible data that’s easily understood. I discuss what Imean by visibility in the section “Visibility Explained:Keeping Data within Reach” later in this part — for now,think of what instant access to sales compensation datacan mean to every sales representative in your com-pany? Common sense tells you: Sales professionalsperform better when they know how they’re beingcompensated at this moment, not a month in the pastusing last month’s data.

� SPIFs that make sense. Does your company provideSpecial Performance Incentive Funds (or SPIFs) for repre-sentatives that deliver top sales of specific products orservices? It’s crucial for your sales force to track SPIFsin a timely manner for such a program to be successful.A sales compensation application makes it easy forrepresentatives to monitor their progress.

� Answers to those “what-if” questions. With a spreadsheet-based compensation plan, your salesrepresentatives are likely left in the dark about howthey can improve their incentive situation. Sales repre-sentatives can calculate the figures for themselves witha commercial application, forecasting how they can sellmore and improve their compensation in the future.

� Error-free data on-demand. A compensation plan basedon a simple spreadsheet is more prone to errors. Nottrusting the system, sales reps lose valuable time track-ing their own commissions instead of selling more. Ifyour sales force has a dim view of the accuracy of yourcurrent plan data, a plan based on a commercial applica-tion can boost your approval rating as it builds confi-dence in your company’s incentives.

Did you know that most spreadsheet-based plans have beenproven to include a 7% to 10% error rate? Without the built-inerror-checking for data entry, conversion, and formulas pro-vided by a dedicated commercial compensation application,your data may be less dependable than you think.

No matter what the size of your sales force, their enthusiasmand drive is all-important! Consider how valuable it will be toeach of your sales representatives when you offer real-timeaccess to compensation plan and SPIF data. That’s real incen-tive, which translates into higher sales for your company.

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What are the rewards for executives?Finally, let’s consider the advantages of a dedicated compen-sation application for your company’s management. Yourcompany’s executives are looking at your plan data from adifferent perspective than your sales force; therefore, cost sav-ings and competitive advantage are foremost considerations.

Why discard your current spreadsheet-based compensationplan? Here’s management’s take:

� Maximum return on your compensation dollars. Yourcompany receives the full benefit of every incentivedollar, because your compensation plan will encouragethe right behavior (while targeting the most importantproducts and services you want to sell).

� Incentives based on the criteria you choose. With acommercial compensation application in place, yourplan can be based on a wide range of criteria (instead ofsimply the total products sold). For example, your planmight focus on discount percentages, rewarding yoursales force for the behavior that maximizes your com-pany’s profits.

� Real-time information at your fingertips. Why wait for acryptic spreadsheet to load, or spend your time poringover outdated printed compensation figures? With acommercial compensation application, you’re immedi-ately presented with easy-to-understand reports usingreal-time data, any time you need them.

� Fewer hours spent on plan maintenance. With the auto-matic scheduling and easy updates offered by a commer-cial application, your company’s compensation analystcan spend more time improving your sales (rather thansimply maintaining a spreadsheet).

For company management, a commercial compensation planreduces the hassle, while adding value to your incentive data.You can spend the time you gain on improving your long-termincentive goals — instead of simply ensuring the accuracy ofyour spreadsheet figures!

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Visibility Explained: KeepingData within Reach

Although keeping a high profile may be the goal of manysales people, visibility in sales compensation management isnot about turning your salespeople into stars who have towear dark sunglasses to avoid being chased by paparazzi.In the context of sales compensation, visibility refers to theeasy access and timely display of your incentive data to bothsales representatives and executives within your company.

Visibility for the sales crowdIncentive visibility can have a significant impact on your com-pany’s sales representatives. The real-time display of compen-sation data is the lever your sales force can use to improvetheir performance . . . and that’s immediately, rather than“whenever your spreadsheet gets updated.”

Suddenly, your sales representatives can chart their own suc-cess! The reports generated by a compensation applicationcan help your sales force to focus their time and energy onthe goals you have set (including the ability to generate“what-if” scenarios for future improvement).

Figure 1-2 shows a typical real-time display from a companyusing a commercial Web-based compensation application.Imagine making your plan data available every morning foreach of your sales representatives . . . that’s the very defini-tion of visible incentive!

Visibility for company managementManagement often considers visibility as the ability toquickly calculate costs and evaluate sales performance.Management needs to keep tabs on whether the plan is actu-ally generating more sales overall. And the typical executiveneeds to know now, not just at the end of the year.

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Figure 1-2: Compensation data made visible through the Web.

Keeping your compensation data immediately at hand is areal asset, giving executives the freedom to model and fine-tune your current plan structure whenever time permits. Tobe honest, if you’re currently using a spreadsheet-based com-pensation plan, you’re not likely to find an executive who’senthusiastic about tinkering with complex formulas and cal-culations! With a commercial compensation application, how-ever, managers will find it far easier to reflect market trendsin your incentive plan.

Because your compensation plan is important to your salesforce and an integral part of your management’s sales strat-egy to improve performance, don’t keep that crucial dataimprisoned within a spreadsheet or a homegrown in-housecompensation application only a handful can comprehend.Make that data immediately visible to the people in yourcompany who will benefit the most!

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Compensation Applications:Improving on Spreadsheet-basedCompensation

Because a spreadsheet-based compensation system is hardto manage, automate, update, and make a global compensa-tion plan with — if you don’t believe me, see the section“Isn’t Excel Just Dandy?” earlier in this part — many newapplication solutions are emerging to address the problems.Following are just a few better-than-spreadsheet solutionsthat companies are experimenting with:

� Web-based, enterprise applications hosted by an outsidevendor (the Application Service Provider method).

� Web-based on-demand applications hosted by an out-side vendor (the On-Demand delivery method).

� Local applications that you install and maintain withinyour company (the Enterprise delivery method).

� Third-party services that completely oversee your com-pensation plan and your compensation data (theBusiness Process Outsourcing delivery method).

Most of these also aim at making your compensation datamore visible. To find out what else distinguishes these variedapproaches to compensation management, turn to Part II,where I discuss the different delivery models used by today’scommercial compensation management applications.

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Part II

Understanding the Delivery Models

In This Part� Evaluating how your compensation data should be stored and

retrieved

� Using an on-demand solution

� Accessing your compensation data through the Web

� Selecting a secure application host

� Ensuring the security of your Web connection

You know your sales compensation plan needs a way tostore data, but what about retrieving it? Are you working

with an outdated delivery model? If you’re not familiar withthe term, a delivery model sounds more like some sort ofhigh-tech Defense Department secret than anything to dowith your company’s sales compensation plan!

Actually, a delivery model is simply the method your com-pensation application uses to store and deliver your incen-tive data to your company’s sales force and executives. Withan old-fashioned spreadsheet, the storage you’re using islikely a file on your computer, and the delivery is via aprinted report posted on a bulletin board, or perhaps a sum-mary sent through e-mail. Convenient and easy? Hardly.

This part introduces you to the delivery models availablefrom today’s compensation applications, as well as the fea-tures you need to consider to secure your data. It also dis-cusses how a cutting-edge compensation application canprovide customized reports and compensation plans.

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Xactly Sales Compensation For Dummies 14

Delivering Compensation DataStraight to Your Desktop

If you’ve made the decision to give your existing spreadsheet-based compensation plan the boot, congratulations! (Startplanning what you’ll do with all that extra time, and how yourcompany can put those cost savings to work.)

The next step in your liberation is the selection of a deliverymethod, which you need to consider a primary factor inchoosing a commercial compensation application. Here’s anoverview of the latest choices for a delivery method:

� Enterprise: Nope, Scotty won’t beam your data aboarda starship! An old-fashioned enterprise solution worksmuch like your company’s Windows software leasingobligations to Microsoft — you run the vendor’s com-pensation software on your company’s computers. Mostcompanies are moving away from the enterprise deliv-ery model: You’re required to troubleshoot and updatethe software yourself, you’re still responsible for thesecurity and backup of your company’s incentive data,and you likely need a dedicated server to store thatdata. (Come to think of it, the enterprise model isn’t allthat far evolved from an antiquated spreadsheet-basedcompensation system.)

Oh, and did we mention the exorbitant cost involved?Your company’s IT shop has to foot the bill for hardware,software licenses, upgrades, maintenance . . . you knowthe drill.

� BPO (Business Process Outsourcing): This deliverymodel isn’t particularly a favorite among compensationanalysts because you essentially turn over everything toan outside service vendor, who takes your raw incentivedata and returns finished reports (either in print or viathe Web). As you might expect, a BPO solution is farmore expensive than any other delivery model, and youcan forget making quick changes to your compensationplan! Everything is handled off-site, so you lose all con-trol. (Go figure.)

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� ASP (Application Service Provider): This type of hostedenterprise application is provided by an outside vendor;in other words, another company stores and protectsyour compensation data, which is an improvement overthe enterprise model. Unfortunately, you still have touse their software application, and they factor in theexpense of dedicated computers to access it, so you’restill forced to spend the bucks so that the vendor canhandle the hardware, software, and maintenance off-site.There’s no real savings with the ASP delivery method.

� On-Demand: For the purposes of this book, we refer toreal-time hosted delivery of off-site tools, reports, anddata as on-demand. The on-demand delivery model pro-vides it all; like an ASP application, an on-demand vendorkeeps your compensation data off-site, where it’s safe andsecure. However, you don’t have to maintain any softwarebecause everyone who is authorized at your companycan access your plan from a Web browser! Nothing toinstall, update, or troubleshoot, so you save a bundle.No separate computers or network server required, andyou still have the ability to immediately customize yourcompensation plan (refer to Part I for a discussion of thebenefits of customization).

Don’t forget about the added security of off-site datastorage, which is often far better than your IT shop canprovide. (Find out more on this later in this part in thesection “The benefits of a secure host.”)

The on-demand delivery model offers the functional breadthand depth of an enterprise application with the real-time con-trol that you demand over your incentive data and your com-pensation plan!

On-Demand Equals Cost-Effective

Reality check: Always ask how much a dedicated compensa-tion application costs. If you’ve resigned yourself to spendingevery last dime of your company’s budget on new software,here’s some very good news — depending on the delivery

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model you choose, you can minimize the cost involved, whileproviding all the advantages of a complete compensationsoftware solution (see Part I for details).

For example, consider the money you can save on an incen-tive application that uses the on-demand delivery model:

� Your company avoids the cost of purchasing new com-puters or upgrading existing computers (both worksta-tions and server machines).

� Your time isn’t spent maintaining and updating hardwareand software.

� You don’t need to worry about a 6- to 9-month imple-mentation, or the new application releases that have tobe applied with an enterprise solution.

� You don’t need to license multiple copies of an ASP application.

These cost savings illustrate why an on-demand compensa-tion application is fast becoming the solution of choice forcompanies around the world. An enterprise application hasto run constantly in the background on your hardware, withan IT shop to constantly baby-sit the system, “chewing up”your company’s valuable resources. With an on-demandsystem, the application itself and your sales data reside off-site, and you access them whenever (and wherever) you likeusing a secure network connection.

An on-demand application provides you with the compensa-tion data you need and the reports you want in real-time,without the hassle of installing and maintaining an expensiveenterprise application.

Putting the Web to WorkOne significant advantage of an on-demand sales compensa-tion application is how easy to use it can be — and not justfor some dedicated IT guy. You may be used to other kinds ofremote applications that require you to master special toolsor a complex interface. And you may rightly wince at thethought of training all your company execs and sales repsto use such a complicated system for sales compensation.

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Enterprise applications are typically cumbersome and diffi-cult to use, and may even require the user to learn a propri-etary language. (Ouch!)

Prepare to be shocked: If your sales representatives andexecutives can view your company’s Web site, then they haveall the tools they need! Most on-demand applications useyour computer’s familiar Web browser to display reports andreceive commands. Any computer with an installed copy ofInternet Explorer and an Internet connection is ready to go.

Of course, besides being a cinch to figure out, a Web site isalways accessible over any Internet connection: Employeescan view their incentive progress using a laptop or securewireless device from just about anywhere in the world! Theapplication is equally easy for comp analysts in updating andcustomizing your company plan, even when they’re on theroad or working from home.

Securing Your CompensationData

Naturally, one of the greatest concerns your company likelyhas about any compensation management solution is howsecure your data is. Every delivery model has some securityrisks associated with it, and the on-demand convenience ofan online compensation application is no exception. If yourdata isn’t well-protected, you could be inviting disaster, soyou want to find out as much as possible about the securityfeatures of any compensation application you consider.

These security questions fall into two categories:

� How secure is the host server or network?

� How secure is the connection technology used by theapplication provider?

The benefits of a secure hostFollowing are some considerations about the host securityyou need to demand from your application provider:

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� A secure physical location. No one wants to entrusttheir company’s data to a “basement business.” If you’vedecided on an on-demand or ASP delivery solution,make sure that your application provider stores yourdata in a secure building, preferably with backup powerand on-site fire protection.

In fact, it’s a good idea that the provider maintains yourdata in a facility that offers SAS 70, Type II security certi-fication.

� First-rate firewall security. Look for a provider that usesthe latest in networking protection, ensuring that yourdata is safe from hackers or viral attack.

� Regular, comprehensive backup coverage. One keyadvantage to off-site data storage — someone else takescare of maintaining a comprehensive backup! You needto assure yourself up front that your chosen service cansafeguard the integrity of your compensation data, with-out the hassle of doing it yourself.

� Minimal data exposure. A top application provideremploys skilled technicians and programmers that takecare of timely updates and integrity testing off-site. Youexperience little or no downtime (and no extra man-power required within your company). You can actuallyexpect 99 percent uptime from a reliable vendor, whichno enterprise application could ever deliver! Securityconsultants often refer to this guarded stance as mini-mal data exposure. In plain English, that means thatdirect access to your company’s incentive data is kept toa bare minimum.

The practice of minimal data exposure does not become aconcern only because you implement a sales compensationmanagement application. You need to protect your dataregardless of the solution you choose. Consider this: Howaccessible is that Excel spreadsheet holding all of your com-pany’s incentive data, including raw sales figures? Is it onyour company’s network, perhaps on a PC protected by ascreensaver password? And how many of your coworkersknow its location? (Oops.) Compare such rudimentary (ornon-existent) security with the SAS 70, Type II certificationof a premiere off-site vendor that I mentioned earlier.

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The benefits of a secure connectionWithout a secure Internet connection, even the best hostedinstallation is practically useless! When shopping for a Web-based compensation application, consider these critical features:

� Strong SSL data encryption. Would you buy somethingfrom an online store using your credit card without asecure connection? Certainly not! Figure 2-1 illustrates asecure connection in Internet Explorer — notice the pad-lock icon that appears in the right corner of the statusbar. With your data safely encrypted, an executive cancheck company compensation figures from any publicunsecured wireless network, without risk of being moni-tored. (In fact, with SSL encryption active, you can checkyour e-mail on a regular basis from any wireless accesspoint using your ISP’s encrypted Web-mail system.)

� User account and password protection. A robust user-account/password-protection system ensures that everyuser of your compensation plan observes securitylevels. If you’re interested in providing different func-tionality for sales representatives and executives, thissystem may appeal to you: Each person who connects toyour compensation application automatically receivesthe proper access level you’ve assigned.

� Complete user logs for your records. With a secure Webbrowser connection, you can track who’s using yoursystem and how often (including possible intrusionattempts by unauthorized outsiders). A log can alsotrack the functions that are most popular with yoursales force and executives; armed with this information,you can streamline your application’s menu system,making it as user-friendly as possible!

� Secure file transfers. If your compensation applicationenables company employees to receive custom reportsor data files, a secure SSL-encrypted Web connectionoffers the same security for file transfers as simple pagedisplays. (Some applications even provide basic messag-ing functionality, allowing your sales representatives toask questions and request specific information from thecompensation analyst.)

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Figure 2-1: An example of a risk-free encrypted Web connection.

Robust data encryption and host security are vital to any on-demand compensation application! If an application you’reconsidering can’t offer these safeguards, we highly recom-mend you look elsewhere for a hosted solution.

Padlock icon

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Part III

Using Xactly Incent toManage Real-World

CompensationIn This Part� Revamping a compensation plan to drive better behavior

� Providing real-time reports

� Reducing manual compensation hassle with Xactly Incent

� Completing an audit without losing your sanity

� Turning a complex compensation nightmare into a winner

This part presents five real-world examples of sales com-pensation challenges that you may recognize from your

own experiences in the real world — where there’s neverenough time to complete manual tasks, and managementmakes demands that seem nearly impossible. (Compensationanalysts know this environment very well.)

In each situation, you can see how a comprehensive compen-sation application can snatch triumph from the jaws oftragedy (or at least save you a tremendous amount of timeand labor, whichever comes first)!

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Providing Versatility for Varying Incentives

Does your compensation plan take a simplistic approachbecause you don’t have the resources to incent the properway? In this section, I describe how you can add versatilityto your compensation plan without adding complexity.

For example, suppose you run a typical sales or service com-pany that’s currently using a spreadsheet-based compensationplan — nothing spectacular, and sometimes a considerableheadache, but it provides the basic incentive figures.

Perhaps your company offers a line of four products, andsales representatives are currently being paid a simple com-mission on raw sales, based on revenue. Last year, you addeda quota and multiplier system, but little improvement in rev-enue has been realized. Examining your company’s products,you see that two of the four products are worth twice asmuch to the company in gross profit.

You may decide to explore one or more of these possibleavenues for better meeting your company’s compensationneeds:

� Pay different commission rates on different quotasfor each product: By encouraging the sale of moreprofitable products, you may realize a jump in companyrevenue that can lead to your personal success.

� Implement smart discount compensation: Basing yourcompensation wholly on raw sales doesn’t incent yoursales force to change their behavior for the better. If asales representative discounts a product, that personreceives less. Conversely, if that sales rep sells closerto retail price, he or she earns more. Unfortunately, thereduced commission is not enough to get their attention,but monitoring and adjusting compensation based oneach percent discount definitely will!

� Introduce a special promotional SPIF (SpecialPerformance Incentive Fund).

� Reward your top 10 sales reps with a bonus.

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Consider how long these changes will take to implement ifyou use a spreadsheet to manage your sales figures. (Onsecond thought, forget about it entirely . . . too much work.Perhaps next year.)

With a dedicated compensation application such as XactlyIncent, you can implement all of these changes in minutes —and begin paying on your new plan structure instantaneously.See Part IV for details.

Delivering Better ReportsFine-tuning a compensation plan means nothing if your com-pany’s sales representatives, sales managers, and executivescan’t actually track performance and follow the results! Thissection brings the need for on-demand reports into focus.

Suppose your company’s sales manager is tired of the manualeffort and lag time that your spreadsheet-based compensa-tion application requires. Plus, the results simply aren’t help-ful. Specifically:

� The constant e-mails to your company’s comp analystsrequesting reports takes too long for a sales team of10 people (let alone the nightmare scenario of 500 salesrepresentatives).

� Sales representatives on the road are effectively out ofthe loop for reports, other than a simple download of aPDF commission statement.

� Team members have no idea how well they’re accumu-lating SPIFs, or even how far they’ve advanced on theirquotas.

Unfortunately, with a spreadsheet-based compensation plan,you really can’t improve this scenario much: What’s brokesimply stays broke.

Consider the results your sales team can get if your companyimplements a real-time, on-demand compensation application:

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� Each sales representative gets his or her own commis-sion report, in real-time, wherever there’s a Web browserand an Internet connection handy. (Figure 3-1 gives youan idea of what this report might look like in XactlyIncent.)

� The sales manager can drill down into team sales dataand check each salesperson’s progress, including SPIFand quota attainment.

� Those constant e-mail requests disappear foreverbecause all of these reports are available instantly, withno manual work required from your company’s compen-sation analysts.

Figure 3-1: A sales manager can see this information at any time withXactly Incent.

On-demand reports allow your company’s sales force toimprove individually and as teams; for more details on someof the reports available within Xactly Incent, see Part IV.

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Automating Compensation without Breaking the Budget

If your company’s compensation analysts spend more timemaintaining your plan than improving it, automation is thekey to improving your compensation plan without adding tothe chaos inherent in a spreadsheet-based system! In thissection, you can find out more about the tasks that automa-tion can handle for you.

Your company’s compensation analysts can appreciateautomation within a compensation plan more than anyone.After all, consider this laundry list of chores they have to dofor each compensation plan provided to your sales force:

� Analyzing, creating, and modifying the compensationplan itself

� Mailing out comp plans for signatures (and licking everystamp)

� Manually collecting sales figures

� Determining which sales representative sold what prod-ucts and services

� Determining quota breakpoints

� Checking for SPIFs and bonus eligibility

� Creating a separate spreadsheet for each representative

� Individually delivering each representative’s figures tomanagement

And the list continues (we just don’t have the room to coverit all in this book). After they complete all these tasks, theystill face the chance of a mistake in the calculations, or send-ing a representative the wrong commission report. Thesethings can happen with a manual system — often enoughthat most compensation analysts take their phones off thehook on payday just to avoid the onslaught of complaintsand clarifications. (How many times have you said, “I knowwhat’s coming, and it’s not pretty . . .”?)

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With a dedicated compensation application, your analystscan actually spend their time analyzing how to make yourplan better. Because applications such as Xactly Incent arehighly automated, they require far less manual intervention.

Who the Heck Is Sarbanes-Oxley?

The Sarbanes-Oxley Act of 2002 requires publicly-owned com-panies to fully disclose their financial status and their rela-tionship with their auditing firm. Specifically, Sarbanes-Oxleyrequires that public companies put in place and documentinternal controls that relate to financial reporting. Full disclo-sure includes sales compensation expenses because mostcompanies spend from 8 to 10 percent of company revenueon compensation. If your company is publicly-owned, thosecompensation expenses can represent a minefield for yourcompany’s compliance with Sarbanes-Oxley regulations.

If your company is privately-owned, or your company’s grossrevenue is under 70 million dollars a year, regulatory require-ments such as Sarbanes-Oxley aren’t likely to affect you yet,but you will still find the audit trail that Xactly Incent pro-vides to be indispensable!

For example, consider this scenario: Your CFO walks intoyour office and tells you that he suspects the sales forcemissed their numbers because your commission accrual cal-culations were wrong. He asks for a complete audit of com-mission expense over the last quarter as soon as possible.

If you’re saddled with a spreadsheet, this request is the verydefinition of the word nightmare. For the next several days,you spend long nights hunched over your office PC and mayneed to enlist the help of someone else, just to get the jobdone on time.

In contrast, suppose you have available the audit logging fea-ture in Xactly Incent: Every change to a plan is completelylogged and can be individually tracked, providing a completeaudit trail at the click of a mouse.

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Figure 3-2 illustrates the on-screen results of a typical XactlyIncent audit trail search, which you can generate securely atany time, from anywhere in the world that offers an Internetconnection. ’Nuff said.

Figure 3-2: Following an audit trail is easy with Xactly Incent.

Gaining a Strategic Edgewith a Fine-Tuned Plan

Most companies using a spreadsheet-based compensationsystem try to keep their compensation plans as simple aspossible, just to keep their manual chores more manageable.Such companies often calculate commissions based onsimple raw revenue or units sold. But what happens if a com-pany tries to implement a more complex incentive plan usingExcel?

For example, suppose the CEO of your company recognizesthat proper compensation drives better sales behavior andimproves performance. Rather than stick with commissionsbased on raw revenue, this executive has implemented someof the different components described in the section“Providing Versatility for Varying Incentives” earlier in thispart into a spreadsheet-based plan, including SPIFs and com-mission bonuses based on optimum discounting.

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Those two incentives work well — but unfortunately, theybecome a real headache to introduce within a spreadsheet-based compensation plan. Suddenly, your company’s salesmanager complains that he needs five compensation analystssimply to maintain all the intricacies of the plan! Worse, thecompany’s sales representatives are “driving blind” inbetween commission reports, and the compensation systemis so complex they don’t understand it.

The beauty of a dedicated compensation application such asXactly Incent lies in these advantages:

� Your CEO can keep all of the existing plan components,but the application eliminates the hassle and manualwork.

� Your company’s compensation analysts now have enoughfree time to actually analyze the compensation plan.

� Your company’s sales representatives can access thesystem and check their performance, 24/7.

The Xactly Incent strategic edge means making the most ofyour company’s human resources rather than encumberingthem with the details of your compensation plan. Whetheryour current spreadsheet-based compensation system isoverly simplified (to make things easier to handle manually)or far too complex (to incent precisely the way you want),Xactly Incent can meet your needs quickly and without tyingup your analysts.

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Part IV

Focusing on Xactly IncentIn This Part� Presenting Xactly Corporation

� Understanding why Xactly Incent is the right choice for you

� Considering specific features within Xactly Incent

� Producing customized rules and reports with Xactly Incent

� Forecasting performance using Xactly Incent

� Understanding how CRM works

� Integrating Xactly Incent into your current compensation workflow

When your company wearies of coping with an inade-quate spreadsheet-based compensation system (see

Part I if you’re not sure why it’s wearying), you’re ready tolook around for a dedicated compensation application (and Part II can help you understand the features you’re shopping for).

In this part, I introduce you to a single compensation application — Xactly Incent, produced by Xactly Corporation.You can find out why Xactly Incent is the choice of successfulcompanies interested in boosting profits by providing benefitsto sales representatives based on their performance.

I also discuss a number of specific features within XactlyIncent and why they’ve proven so valuable to Xactly’s customers.

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Tying Everything Togetherwith Xactly Incent

A good sales compensation application needs to deliver essen-tial functions and features, and the more robust those featuresare the more attractive the solution looks to your company’scompensation analysts. Take a look at how Xactly Incent com-bines the most attractive delivery method with the featuresdiscussed in earlier parts:

� Xactly Incent uses the on-demand delivery method.Your company gets all the benefits of the on-demandmodel that are discussed in detail in Part II: Your data isstored off-site, yet is immediately available whenever youneed it, without requiring you to maintain or upgradelocal PCs or a local server! You can customize your com-pensation plan’s rules and reports remotely, using a Webbrowser.

� Xactly Incent offers bulletproof security. No matterwhere you go around the world, you can use any standardWeb browser to create a secure SSL-encrypted connec-tion to your compensation plan — if you see the padlockicon in the Internet Explorer status bar, you’re protected!Likewise, Xactly provides a SAS 70, Type II certified telco-grade hosting facility (think highly secure, with secondarypower on-tap) for your company’s incentive records,with comprehensive data backup and physical security.Your peace of mind is assured.

� Xactly Incent reduces the errors hiding in spreadsheet-based plans. Xactly Incent’s built-in data entry checksand online data verification tools help ensure that yourcompensation figures are as error-free as possible. Whytry to make changes to 10 (or 100) spreadsheets using theExcel formula bar, when you can change things so easilyacross an entire plan using a dedicated compensationapplication?

� You get real-time access to your compensation plan.Your executives and sales representatives don’t haveto wait until the next time you juggle the spreadsheetnumbers, or the next time you receive copies of yourcompensation report from a BPO vendor . . . instead, your

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company’s employees can connect to your Xactly Incentcompensation plan at any time, day or night, using a Webbrowser.

� Sarbanes-Oxley is a done deal. Xactly Incent providesthe effortless regulatory record-keeping that compensa-tion analysts dream about! Xactly Incent delivers theauditing for you, with no hassle or late nights at yourdesk required.

You can see how Xactly Incent covers all the bases of a supe-rior compensation management tool, eliminating the hassleof creating and maintaining a compensation plan using anawkward spreadsheet — while boosting the visibility of yourcompensation plan to everyone in your company.

Giving Xactly Incent’s BestFeatures the Once Over

As you consider your choices in the compensation applicationmarket, you’re likely to look for a number of features thatXactly Incent offers. Xactly Incent’s standout features include:

� Better IP login security. Typically, companies prefer touse user ID/password combinations to provide access — agood idea for those who will be on the road because youcan log in from any Web browser. However, if your com-pany desires the next level of login security, you can alsorequire that an incoming login originate from a specificnetwork or Internet IP address; the combination of the twovirtually guarantees the identity of the user! (Refer to theprevious section “Tying Everything Together with XactlyIncent” for more security features of Incent.)

� Complete SPIF support. If your compensation plan usesSPIFs (Special Performance Incentive Funds) to drive salesof specific products or services, you can add those fundswithin Xactly Incent and reflect them within your com-pensation plan. Your sales force and executives havereal-time access to SPIF data.

� Customize or create multiple plans. You can quickly andeasily create a completely new compensation structure —or modify the specifics of an existing plan — within Xactly

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Incent! No external application or cumbersome plan editorrequired . . . enabling you to make changes to reflect chang-ing sales factors from anywhere, even on the road!

� Information that’s easy to understand and access.Unlike other compensation applications that use propri-etary software, Xactly Incent is designed for the Web:That Web-friendliness results in plan data that’s dis-played with colorful and easy-to-understand graphics,using common Web browser HTML controls that every-one in your company has used countless times before.Your company avoids a steep learning curve and lengthytraining for your sales force!

� Automation done right. Xactly Incent includes the toolsyou need to automate the calculations required by bothindividual incentive programs and your entire sales com-pensation plan. Many common calculations and tasks areimmediately available when you’re setting up your plan,while others specific to your products and services canbe easily added later as you need them.

Features like these have made Xactly the leading company onthe map when it comes to on-demand compensation applica-tions like Xactly Incent.

If you’re going to bring your company’s compensation planout of the spreadsheet box and invest in a commercial incen-tive management application, consider how much work thesefeatures will save you — and how much profit you’ll reap froma motivated sales force. That’s the answer to TheCompensation Question!

Rules and Reportsfor Every Need

If you’re using a spreadsheet-based compensation plan rightnow, ask yourself these two questions:

� Have you ever demanded automated, rules-based com-pensation criteria that your Excel worksheet simplycouldn’t provide?

� How often have you wished for comprehensive reportsthat are tailored to your needs?

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In this section, you find out a little more about why XactlyIncent can save you so much time and produce results thatare so much better than a simple spreadsheet can supply.

Rules-based compensation done rightYou may be wondering how Xactly Incent can supply theneeds of so many different companies selling diverse prod-ucts and services: After all, a company selling energy and util-ity futures and an insurance company have two completelydifferent takes on incentives, and two different structures fortheir respective compensation plans. How can one applicationfill in all the blanks?

The Xactly Incent screen shown Figure 4-1 reveals the answer:rules-based plan architecture. With Xactly Incent, you can lit-erally build your own plan from scratch, completely focusedon your core sales strengths (whether your company offersproducts, services, or a mix) and using the criteria that youdeem most important.

Figure 4-1: Xactly Incent’s rules-based architecture makes it a most flexible application!

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Why limit your compensation to simple returns from grosssales or unit sales? With Xactly Incent, you’re free to baseyour compensation to your sales representatives on other criteria, like profit margin, product quotas, appointmentsarranged, rapid response or call time duration, improvementsin individual sales, and much, much more!

With this flexibility, you can design compensation plans thatinclude special sales incentive offers that are nearly impossi-ble to include with a spreadsheet-based plan, such as

� SPIFs that run for a specified length of time

� Sales bonuses

� Guarantees for sales representatives

� Recoverable draw for commission reimbursements

You can save time with Xactly Incent as well — that’s becauseyou need only enter common company data into Xactly Incentonce. For example, this information can include:

� people’s titles

� names and incentive-related information for personnel

� customer data

� rate tables and quotas used within your company

As you can imagine, the automation features offered by XactlyIncent come in handy when you need to update a quota, ratetable, or an incentive rule across multiple compensation plans.Once again, imagine the work involved in updating informationacross multiple spreadsheets . . . and then consider that XactlyIncent requires you to make those changes only once.

The reports you want, on-demandFigure 4-2 illustrates a typical Xactly Incent report configura-tion screen. Of course, you can build your own reports easilyusing the criteria you select from your plan, and you can makecustom reports available to specific users. But a number ofstandard reports that have proved very popular with Xactlycustomers are already available from the start:

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� Individual plan statements for each sales representative

� Overall team rankings

� Summary reports of sales performance for your executives

Figure 4-2: You can easily create customized reports from within XactlyIncent.

Naturally, reports can be viewed on-screen, or printed usingthe standard print controls within Internet Explorer.

The What-If Calculator and theCustomer RelationshipConnection

Although we’ve discussed in the previous sections severaladvantages of Xactly Incent that can revolutionize the wayyou handle your incentive plan, two particular features withinthis application are likely to drive your company’s sales forceto a new level of sales performance — and this section explainshow your company’s compensation plan can benefit fromboth of them.

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Forecasting something better than the weatherA company using a spreadsheet-based compensation plan typically supplies a printed summary to each sales represen-tative on a regular basis, and that’s probably all it can do.Such a report isn’t likely to drive better performance. After all,it’s a report of past results, not geared towards the future.

What if you could motivate a sales representative to changehis or her selling habits to match your company’s overallgoals? Well, that’s the very definition of a sales compensation“what-if” (or forecasting) tool, and Xactly Incent offers a spe-cial What-If Calculator mode for every sales representative inyour company! As you can see in Figure 4-3, this calculatorenables any user to

� Project future incentive earnings by changing the criteriayou specify, from units sold to profit margin or call times.

� Create a sales goal that results in higher earnings (usingtables and quotas that you’ve customized).

� Calculate breakpoints for different incentive levels,including SPIFs and bonuses.

Figure 4-3: Using the Xactly Incent What-If Calculator to forecast earningsbased on performance.

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Managing customer relationsA sales force handles more than sales; they maintain the rela-tionship with the people buying your product or service, so areally complete compensation plan looks to grow sales andbuild long-lasting customers. Think of Customer RelationshipManagement (CRM) as the other side of sales force automa-tion. Where Xactly Incent provides your sales representativeswith compensation information, CRM software like that pro-vided by salesforce.com and others gives your company’semployees access to

� Customer information. Your sales force can immediatelydisplay all types of customer data, as well as use it withinMicrosoft Office and Outlook.

� Current sales figures. Your company’s sales managerscan use similar what-if tools to forecast upcoming trends,or monitor the latest sales data in real-time (just asXactly Incent provides the latest compensation figureson-demand).

� Channel and product status. Track performance of yourchannel sales, or display information on product cost,quantities, and inventory.

Xactly has partnered with CRM application vendors like sales-force.com to provide a complete package of Xactly Incent andCRM software — the program is called the Xactly PartnerProgram. More information on this complete solution is avail-able on the Xactly Web site, at www.xactlycorp.com.

Xactly Incent links to Salesforce from the CRM softwareprovider salesforce.com. If you’re already a Salesforce cus-tomer, you can leverage your existing investment to make iteven more valuable using Xactly Incent!

Integration through Xactly Incent

A common misconception among companies contemplatingan upgrade to a compensation management application is that

Part IV: Focusing on Xactly Incent 37

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they’ll have to scrap their entire compensation system toimplement the solution. This section explains that with XactlyIncent, that’s definitely not the case!

In fact, Xactly Incent can simply take the place of your spread-sheet in your workflow, eliminating the inefficiency and solvingthe problems discussed in Part I. The remainder of your com-pensation workflow continues to function as-is.

For example, consider these ties that you can make betweenXactly Incent and the working parts of your current spreadsheet-based compensation system:

� Keep your existing compensation data collectionmethod. Xactly Incent is designed to integrate with yourcurrent compensation data collection system (whetherit’s based on a version of a Salesforce CRM application,simple raw data from your ordering system, or some-thing in-between).

� Your payment function remains the same. Does yourcompany award bonuses separately? No problem!Whether your compensation plan figures are currentlyfed into your company’s accounting system, or areprocessed as a separate account, Xactly Incent canexport the data you need.

� You don’t need to change your current auditing orregulatory practices. However, you’re likely to find thatyour company’s compensation analysts have far lessto do to fulfill their audit and regulatory requirements!(Everyone can agree that less work for the same resultsis A Good Thing.) Xactly Incent can provide the sameaudit trail — with fewer errors, of course.

In case you do want to revamp your entire compensationworkflow, Xactly has partnered with proven consulting firmsyou can call upon to help streamline your company’s compen-sation process.

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Part V

Top Ten Advantages toChoosing Xactly Incent

In This Part� Finding out more about Xactly Corporation and Xactly Incent

� Summing up the Xactly Incent solution

In this final part, we provide you with the contact informa-tion you need to connect with Xactly Corporation. This

part represents the traditional Dummies Part of Tens: Justwhat you need to liven up small talk at your next departmen-tal meeting — ten reasons to switch to Xactly Incent!

Rules-Based FlexibilityYou can easily customize your compensation plan to make itan exact match for your company’s needs.

Real-Time Visibility,Guaranteed

Your sales representatives and executives can access com-pensation figures from a Web browser in real-time, makingyour compensation plan a visible resource to help promotebetter sales behavior.

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Xactly Sales Compensation For Dummies 40

Affordable, Maintenance-freeConvenience

Xactly Incent is a truly low-cost compensation solution,requiring no local computer applications and no dedicatedworkstations or server. (Plus, your compensation analystsdon’t have to double as IT experts.)

Rapid DeploymentWhy wait months for an enterprise application to bedeployed? With Xactly Incent, most deployments take placein a matter of days, and your company can quickly realize areturn on its investment.

Complete ReportsXactly Incent can provide your sales force with on-screencompensation reports, using a number of criteria that youspecify. (If your local PC has a printer connected, they lookgreat on paper too!)

Xactly Incent’s What-IfCalculator

Your sales representatives can forecast their incentive totalsbased on future performance, which helps reinforce theproper sales behavior.

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Integration with CustomerRelationship ManagementSystems

Integration between Xactly Incent and Customer RelationshipManagement systems such as Salesforce enable your sales rep-resentatives to easily build commission and bonus estimates.

Familiar Web InterfaceYour company’s employees use Web controls to control andcustomize Xactly Incent.

Fast and Easy CustomizingYou can rapidly make changes to your compensation planusing your Web browser, allowing quick plan updates tomatch changing market conditions.

On-Demand SecurityYour company’s compensation data remains in a high-securitySAS 70, Type II certified telco-grade hosting facility, and theWeb connection you use to access your compensation plan isencrypted for protection.

Convenient to ContactThe eleventh reason to consider Xactly Incent is that thecompany is easy to reach. You can find out more about XactlyIncent, including the consulting, training, and support serv-ices offered by Xactly, in any of these ways:

Part V: Top Ten Advantages to Choosing Xactly Incent 41

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� The Xactly Corporation Web site, www.xactlycorp.com,offers a number of animated walkthrough videos and fea-ture descriptions that describe Xactly Incent in moredepth. You can find e-mail contact information thereas well.

� You can call Xactly at 866-GO-XACTLY (866-469-2285), or408-977-3132.

� You can e-mail the Xactly Sales department [email protected], or request general companyinformation from [email protected].

� The company’s mailing address is

Xactly Corporation 400 Race Street, Suite 201 San Jose, CA 95126

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Too many companies still use spreadsheets to keep track of their sales compensation. In this book, you can find out why you need more than a spreadsheet to compensate your sales force properly. A dedicated sales compensation application can drive the right behavior among your sales representatives, resulting in increased performance and profitability.

This guide walks you through the business and technical aspects of evaluating various sales compensation management solutions and transitioning your company’s plan to take full advantage of the latest technologies for today’s mobile sales force.

ISBN: 0-470-04598-1

Not resaleable

Mark L. Chamberswith Christopher W. Cabrera

Find out how to incent right and sell more!

A Reference for the Rest of Us!®

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Say goodbye to spreadsheets— start managing your sales compensation plan

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Improve your spreadsheet-based compensation plans with an online solution

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